Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 7, 1991 TAG: 9102070105
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: JOEL TURNER MUNICIPAL WRITER
DATELINE: LENGTH: Medium
The move caused the city to lose $30,500 in interest and $11,000 in principal because of the early withdrawal of three certificates of deposit.
Treasurer Gordon Peters said Wednesday he made the switch because he was not sure of the type of collateral CorEast had posted with state treasury officials to secure public deposits.
State law requires banks and other financial institutions to provide the state with collateral to secure deposits by local governments. But Peters said he decided to withdraw the money because CorEast is in federal receivership.
The federal Resolution Trust Corp. assumed control of CorEast on Friday after the government's Office of Thrift Supervision declared the savings bank insolvent.
"To protect the city and the taxpayers, I thought it was best to take early withdrawal" and invest the funds elsewhere, he said.
Peters said this is the first time the city has withdrawn funds early and taken a penalty since he became treasurer. He said he spoke with Finance Director Joel Schlanger and City Attorney Wilburn Dibling before shifting the money.
The funds had been deposited in CorEast because it had offered the highest interest rates. The city divides its money among banks or other financial institutions and seeks competitive bids on investments.
Peters said the city has earned $1.6 million in interest on investments since July 1, so the loss of $41,500 won't cause any financial problems. He said all the city's funds are now deposited in banks, with none in thrifts that have been identified as possible takeover targets.
by CNB